Jack Scatizzi ITEN EIRSQ1 Bootcamp 10/14/19

Pitching to Investors& Pitch Deck Basics

ABOUT ME

• Spent 4 years with Tech Coast Angels- San Diego• Reviewed over 1,400 applications• Attended over 600 investor pitches• The San Diego network led investments of over $23M into 37

companies

• Have raised over $3M for 4 early-stage ventures including:• Canopy San Diego- a seed fund/accelerator• Real Wellness- a celebrities CPG wellness company• SingldOut- an online dating site that matched based upon genetics• MomCo- an app for Moms to meet other Moms

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THE ART OF PITCHING INVESTORS

• No one has ever closed a check off a single pitch• Therefore the goal of any pitch is to get a follow-up meeting

• The best pitches tell a story, • So your pitch should contain all of the elements of a good story• “The secret to selling is to tell a simple, coherent and vivid story designed

to emotionally engage — and intrigue — the investor.”• “Investors bring curiosity; it is your job to capture their attention.”

• Raising capital is a sales process• Very similar to selling a product to an enterprise level client 3

DIFFERENT TYPES OF PITCHES

• Elevator Pitch• Short generally 1-3 minutes, most informal• Not specific to investors, used in all networking situations• Goal is to initiate contact and generate initial interest

• Meeting (coffee/lunch/happy hour/phone call) • Introduction (potential client/investor/partner)

• Format is utilized by Pitch Competitions• Quick Pitch (TCA-SD, 2 minutes)• Fast Pitch (TCA-OC, 1 minute)• Real Elevator Pitch Competition (SLU, elevator ride)

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DIFFERENT TYPES OF PITCHES

• Demo Day Pitch• Approximately 5 mins, very product focused

• no investor ask- generally a public forum• rarely includes financial projections

• Goal is to generate interest in the product and by extension the company/investment opportunity

• No one invests off a Demo Day pitch, but it’s a great way source leads- early customers, investors, advocates/evangelists

• Staple of Accelerators & University Entrepreneurial Programs• Y Combinator, Tech Stars, 500 Startups

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DIFFERENT TYPES OF PITCHES

• Formal Investor Pitch to an Investor Group• 12-15 minutes, most formal with set time limits and format• Generally followed by Investor Q&A

• Most important part• Do not go over on time and cut this part short

• Goal is to generate enough interest to get follow-up meeting• Continue to move along in their process

• Pitching to entire group• Eventual invitation to a Due Diligence meeting

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DIFFERENT TYPES OF PITCHES

• Informal Investor Pitch• 30-60 minutes, fairly informal with no set structure

• May occur over lunch or happy hour• May not require a pitch deck

• But you should have one ready• Will probably be more conversational• Goal is to generate enough interest to get follow-up meeting

and eventually move into Due Diligence and term sheet negotiations

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DIFFERENT TYPES OF PITCHES

• Each type of pitch has it own goal and format • Product focus vs Investment focus• Q&A vs judges vs just the pitch• Audience- public vs private, general vs investors only

• Thus each needs to be treated as an individual pitch• You can’t simply scale down an informal investor pitch to-

• A 12 minute formal investor pitch• A 5 minute Demo Day pitch• A 2 minute pitch competition

• Each format and audience requires its own “story arc” 8

TECH COAST ANGELS WORKFLOW

• Network to find connections to the organization (Elevator Pitch)

• Submit Application (Pitch Deck)

• Presentation to Subcommittee (Formal Investor Pitch)• 8-12 Members with domain specific backgrounds

• Presentation at Monthly Membership Meeting (Formal Investor Pitch)• 30-40 Members with various backgrounds

• Deep Dive Due Diligence Meeting (Informal Investor Pitch)

• Full Due Diligence• Road Show to syndication partners (Formal Investor Pitch)

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SAMPLE DEAL FUNNEL FOR ANGEL GROUPS

10Funded- <4% (<10 per year)

Deep Dive DD Meeting~10% (2/25)

General Membership~25% (5/63)

Committee Meeting~50% (10/125)

Full Due Diligence~5% (1/12)

Applications Submitted- (20/250, per month/year)

ANATOMY OF A PITCH

• Keys to a Great Elevator Pitch• Attention Grabber• Create a mental picture• Tell the story• Connect the dots to the opportunity• Remember to engage the person you are “pitching”

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Canopy San Diego is Southern California's only seed-stage accelerator program for technology andbusiness infrastructure companies that support the legal cannabis industry. As an accelerator, we investcash, mentorship, and services in our portfolio companies to 'accelerate' their development. In return,we hold a 5-10% equity position in each company and our investors share in the success of our portfoliocompanies. Canopy San Diego does not invest in companies that directly grow or sell cannabis and itsderivatives.

ANATOMY OF A PITCH

• Topics to Cover for Investor Pitches (~13)

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• Identification of the Problem• Overview of your

Product/Solution• Value proposition to

Customer• Target Market and Size of the

Opportunity • Revenue or Business Model• Competitive Landscape

• Go-To-Market Strategy• Stage of Development & Key

Milestones• Financial Projections• Management Team• Critical Risks & Challenges• Exit Roadmap• Funding Requirements & Use

of Funds

ANATOMY OF A PITCH

• Topics to Cover for Investor Pitches

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• Identification of the Problem• Overview of your

Product/Solution• Value proposition to

Customer• Target Market and Size of the

Opportunity • Revenue or Business Model• Competitive Landscape

• Go-To-Market Strategy• Stage of Development & Key

Milestones• Financial Projections• Management Team• Critical Risks & Challenges• Exit Roadmap• Funding Requirements & Use

of Funds

ANATOMY OF A PITCH

• Basic Background Information & Vision

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• Introduce yourself & the company• Summarize what you do

• Elevator Pitch

• Identify the “pain point”• Not everyone understands the industry

as well as you do• Identify why it’s a large & growing issue

• “Need to Have” vs. “Nice to Have”• Vitamin vs. Pain Killer

• Identify your customer base• Who would use or buy your product &

why would they use or buy it

• Explain the solution to the problem• How does it solve the “pain point”• What makes it unique

• Describe your “secret sauce”• Why are you going to be successful

• Especially if you have competition

ANATOMY OF A PITCH

• Topics to Cover for Investor Pitches

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• Identification of the Problem• Overview of your

Product/Solution• Value proposition to

Customer• Target Market and Size of the

Opportunity • Revenue or Business Model• Competitive Landscape

• Go-To-Market Strategy• Stage of Development & Key

Milestones• Financial Projections• Management Team• Critical Risks & Challenges• Exit Roadmap• Funding Requirements & Use

of Funds

ANATOMY OF A PITCH

• Nuts & Bolts of the Business & Overall Opportunity

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• What is the opportunity in the market• Total Available Market (TAM)• Serviceable Available Market (SAM)• Serviceable Obtainable Market (SOM)

• Discuss how you plan to monetize your product

• Walk through the economics of one unit focusing on why your revenue model is advantageous to both the customer and your business

• Discuss any current customer traction & their experiences with the product

• Describe the competitive landscape• Compare your features & benefits

• Focus on what makes your product unique

• Identify the barriers to entry• For both current & future

competitors

ANATOMY OF A PITCH

• Topics to Cover for Investor Pitches

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• Identification of the Problem• Overview of your

Product/Solution• Value proposition to

Customer• Target Market and Size of the

Opportunity • Revenue or Business Model• Competitive Landscape

• Go-To-Market Strategy• Stage of Development & Key

Milestones• Financial Projections• Management Team• Critical Risks & Challenges• Exit Roadmap• Funding Requirements & Use

of Funds

ANATOMY OF A PITCH

• Execution of Your Plan

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• Explain your Go-To-Market strategy• How you will reach/acquire potential

customers• How much will it cost to acquire new

customers, what is their life time value, what is your churn rate, etc.

• Provide a timeline for key development milestones related to the product and sales/marketing

• Briefly provide an introduction to all key members of the Management Team and any key advisors

• Outline how large of an opportunity this represents

• In 5 years can you reach $5M or $50M in annual revenue

• Demonstrate an understanding of your financial model

• Include rationale for all assumptions

• Demonstrate you can run your company with capital efficiency

• Will it require spending $10M to hit $5M in total revenue or to hit $100M

ANATOMY OF A PITCH

• Topics to Cover for Investor Pitches

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• Identification of the Problem• Overview of your

Product/Solution• Value proposition to

Customer• Target Market and Size of the

Opportunity • Revenue or Business Model• Competitive Landscape

• Go-To-Market Strategy• Stage of Development & Key

Milestones• Financial Projections• Management Team• Critical Risks & Challenges• Exit Roadmap• Funding Requirements & Use

of Funds

ANATOMY OF A PITCH

• Investor Specific Details

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• What are the risks and how will you mitigate them

• Outline future funding needs• Will the company require $10M or

$250M to achieve success

• Explain the use of funds for current fundraising effort

• Product Development• Sales & Marketing• New Hires

• Outline exit strategy• Merger, Acquisition, IPO• Who are your target acquirers

• How would they benefit from acquiring you

• Exit Comps with dates and values

• Briefly outline the deal• Equity vs. Debt• Pre-money valuation

SUMMARY

• Pitching is very individualized to the presenter and company• No one size fits all secret template/format exists• Requires lots of practice and moving slides/concepts around while

changing descriptions and delivery

• Remember that pitching is simply telling the story of your company/vision

• “The secret to selling is to tell a simple, coherent and vivid story designed to emotionally engage — and intrigue — the investor.”

• “Investors bring curiosity; it is your job to capture their attention.”21

ONLY PITCH ACCREDITED INVESTORS

Accredited Investor As Defined by the SEC

In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.

The term "accredited investor" is defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Commission (SEC).

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BEWARE OF PUBLIC SOLICTATION

Public Solicitation As Defined by the SEC

Rule 506(c) permits issuers to broadly solicit and generally advertise an offering, provided that:

• all purchasers in the offering are accredited investors• the issuer takes reasonable steps to verify purchasers’ accredited investor

status and• Certain other conditions in Regulation D are satisfied

Unless you know that everyone in the audience is an accredited investor (as defined by the SEC) you should not openly discuss your fundraising efforts and certainly should not be discussing the deal terms of any open round.

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ADDITIONAL NOTES

• Include contact information- name, email, website, phone number• Two versions

• One to pitch• high concept with minimal words, mainly images and text large 20pt or larger

• One to email out• heavier on text, no one there to explain the concepts

• Emailing out use PDF• easily read across all platforms- mac, pc, tablet, mobile, etc.

• Presenting, ppt preferred • Most investors don’t have prezi, keynone, etc.

• File name- Company Name and Date no v234 no other descriptors 24

RESOURCES

• Elevator Pitches – So Short, Yet So Hard to Perfect by ITEN EIR Jack Scatizzi

• The Executive Summary: Your Startup’s Resume by ITEN EIR Jack Scatizzi

• Creating an Investor Pitch Deck That Makes Sense! by Jack Scatizzi (An ITEN EIR)

• The two best pieces of early-stage pitching advice

• How to Build a Startup & Understanding Venture Capital

• How Many Investors Should You Talk to in a VC Fund Raise? And How Do You Prioritize?

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RESOURCES- ITEN

ITEN PROGRAMS for scalable tech product startups

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Monthly Elevator Pitch Workshops (starting in 2020)

EUREKA! Validation Modules *• Operations• Product Development• Marketing• Sales* Available online, work at your own pace

Investor Readiness Program• Mock Angels Investor Pitch

Preparation Session(s)• Diligence Preparedness• Service Provider perks

Mentor Match DatabaseEntrepreneurs in Residence

JACK SCATIZZI- JSCATIZZI@ITENSTL.ORG

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Jack Scatizzi has raised over $3M from early-stage investors for numerousventures, held operational roles with multiple start-ups, and has been anactive advisor to over 30 early-stage companies across diverse verticalswithin the St. Louis and San Diego ecosystems.

His entrepreneurial experience includes being the Managing Director andone of the Founding Partners of Canopy San Diego- an accelerator programfor technology and business infrastructure companies that support thelegal cannabis industry, and the Head Analyst for the San Diego network ofthe Tech Coast Angels- one of the nation’s largest and most active AngelInvesting networks. While Jack was with TCA-SD, they investedapproximately $23M in 37 companies over a three-year period.

Jack recently moved back to St. Louis and has been actively engaged with numerous local entrepreneurial support organizations- ITEN, Arch Grants, etc. Additionally, he has been working as a Biotech Analyst on behalf of BioGenerator, biotech funds, individual investors, and early-stage companies.